October 05, 2013
Tyler Cowen: Future Belongs To Software Developers, Marketers

For the release of Tyler Cowen's new book Average Is Over: Powering America Beyond the Age of the Great Stagnation Erik Barker has interviewed him about the future of work.

The people who will do better are those who are very good at working with computers, programming and software. Thatís a rather obvious point but I think as income inequality increases people who are very good at positioning themselves in service sectors with some kind of marketing plan or somebody that can grab the attention of wealthier people will do well.

Psychologists will be in greater demand to design subtle marketing strategies?

Basically, the scarce skills for the future are all about psychology because computers right now still donít do that very well. The good jobs will be about branding. Theyíre all about figuring out how to get other peopleís attention and I think thatís really the growth sector weíre looking at.

Psychology has a field has advanced more than generally appreciated in terms of its understanding of what makes us tick. It seems plausible that research in psychology will yield better understandings of how to do marketing. But will that require many specialists in subfields of psychology to incorporate that understanding into marketing campaigns?

My take on this: many facets of marketing have already been automated using computer models that avoid the need for human understanding. Amazon guesses what to pitch to you by processing thru large amounts of information. Email marketers do the same. Ditto remarketers who show you ads on other sites because you've previously been on some shopping site. Nielsen, NetFlix, and other organizations track what shows and movies you watch. How many psychologists do they employ? How many software developers? I'm going to guess the ratio of software developers to psychologists is incredibly high. Though marketers come from many educational backgrounds.

What I'd like to know: is spending on creation of advertising creatives (e.g. those 30 second TV ads) going up or down as a fraction of total consumer sales? Overall is advertising spending growing faster or slower than the overall economy? I have no idea. Is this like an intensifying war? Or have computers so lowered the cost of marketing that money has been shifted away from marketing and toward, say, product development?

What I'd also like to know: what kinds of goods have the most advertising spend as a fraction of sales? Are those goods going to become larger or smaller fractions of total consumer spending in the future? Also, are in-person sales people a shrinking or growing fraction of sales and marketing budgets? Will online marketing lead to the layoff of most sales people?

Also see my previous post about Average Is Over.

Update: One of Tyler's most interesting observations in the interview: The people who are more willing to follow the advice of computer systems will make better decisions on average. A substantial fraction of the population will resist following directions from computers. Even people well disposed toward following a computer's advice will resist when they decide their own intuition and immediate emotional reaction to the advice are correct.

Share |      Randall Parker, 2013 October 05 03:07 PM 

WCN said at October 6, 2013 5:59 AM:

On following the advice of computers systems, I couldn't help but think of the movie 'Demolition Man' where the police followed every single step of advice that their handheld device gave them: "With a firm tone of voice demand that maniac lie down with hands behind back and say the words: "Our else!"

Tim said at October 6, 2013 4:52 PM:

Sorry Randall but don't really agree...the biggest threat to our jobs isn't automation in the foreseeable it is someone over in India or China willing to do it for pennies on the dollars compared to our compensation. And that would go for your computer science jobs as well, someone in Taiwan, Singapore, India, or China who would be happy being a programmer on 12K a year compared to 60-80K an American would expect. Even in the example you gave ordering things on line...at the user end (you) it all appears to be completely automated. My understanding is that at the order end,the factory (probably in China), it just spits outs a printed order form, that is filled manually by a guy walking around with a two wheeled cart or whatever, boxed manually and shipped manually. It just appears all high techie and automated on our end, the reality not nearly so much. Look at the current shortage we face right now in truck drivers, relatively high pay moderate skill level jobs going un-filled.


from the link: ...The American Trucking Associations, assuming a current shortage of more than 20,000 truck drivers compared to available jobs, projects the gap to grow annually over the next 10 years.

Sure those nifty self-driving & (presumably) auto-loading unloading trucks that I am sure we will have in a few years will take care of this.

Tim Hogan said at October 6, 2013 5:23 PM:

Following short term advice from computers may be a smart bet - 3 day weather forecasts. Betting on computer forecasting of complex medium and long term processes to be wrong is a much safer bet. The stock market, global "warming" and predicting societies various trends are good examples. That won't change for decades.

philw1776 said at October 7, 2013 8:57 AM:

Remember, follow that GPS no matter what your lying eyes tell you.

Nick G said at October 7, 2013 12:24 PM:

Tim, Randall,

When thinking about imports, exports and trade balances, and labor outsourcing, it would help to incorporate the concept of "comparative advantage". Basically, when trading partners have different currencies things work differently. Floating exchange rates (in theory) eliminate trade imbalances, and trade makes both better off.

"In economics, comparative advantage refers to the ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another. Even if one country is more efficient in the production of all goods (absolute advantage in all goods) than the other, both countries will still gain by trading with each other, as long as they have different relative efficiencies.[1][2][3]

For example, if, using machinery, a worker in one country can produce both shoes and shirts at 6 per hour, and a worker in a country with less machinery can produce either 2 shoes or 4 shirts in an hour, each country can gain from trade because their internal trade-offs between shoes and shirts are different. The less-efficient country has a comparative advantage in shirts, so it finds it more efficient to produce shirts and trade them to the more-efficient country for shoes. Without trade, its opportunity cost per shoe was 2 shirts; by trading, its cost per shoe can reduce to as low as 1 shirt depending on how much trade occurs (since the more-efficient country has a 1:1 trade-off). The more-efficient country has a comparative advantage in shoes, so it can gain in efficiency by moving some workers from shirt-production to shoe-production and trading some shoes for shirts. Without trade, its cost to make a shirt was 1 shoe; by trading, its cost per shirt can go as low as 1/2 shoe depending on how much trade occurs."


Ricardo the Autistic said at October 7, 2013 1:54 PM:

The failure of economics is where it utterly disregards ecology, biology and genetics.

There are many instances of disparate societies trading and it leading to wiping out the majority or all of one or both populations due to introducing novel pathogens.

However, the evolutionary weirdos who trade with non-kin will not be long in this world. They're killing themselves and everyone else they've inflicted international trade on taking their fake-kin religions and parasites with them. The only way that humans can adapt to capitalism is by escaping it entirely (Hasidim, Amish, etc.). Mormons are not a counter-example. They, too, face rapidly declining fertility.

Future humans will be just like territorial mammals who mark territory and fight to the death anyone who dare trespass. Everyone else will have been driven to extinction by "free trade."

Trade is a random event, not a trend.

Randall Parker said at October 7, 2013 9:39 PM:


There isn't a trucker shortage. The pay is very low and the hours long and far from home. If the shortage was real then pay would go up. I bet there won't be a substantial increase in trucker salaries.

Programmers happy to make $12k per year: A Chinese friend in China is making over $100k. Software developer salaries in India have gone up a lot too in recent years according to Indian devs I used to remotely supervise. I'm hearing numbers that are multiples of the $12k. Granted, you can find cheaper ones. But the ones from better schools (i.e. schools you have to be very smart to get into) make much more. I think there is a general misunderstanding of software developer salaries. Americans expecting $60k to $80k? At the top places they make a few times that amount.

Ordering and factories in China: When you put an order in at Amazon the stuff is on their shelves. They've got some steps in their factories robotized. Check out what Kiva Systems could do in 2008. Amazon bought the company. AutoStore warehouse robots look more ambitious. Not clear how close to market they are. By contrast Egemin Automation is automating many kinds of warehouses with some pretty impressive technology.

Randall Parker said at October 7, 2013 9:58 PM:

Ricardo the Autistic,

I am impressed with the groups who effectively isolate themselves from modernism and pump out lots of babies. I've previously written about the Amish population boom. The Mennonites and Hutterites have high fertility as well.

I certainly think the people who are willing and able to maintain a modern society aren't making enough babies. But maybe that'll change once it becomes possible to make very high quality babies. Consider the appeal of 150 IQ babies with perfect health and great personalities. The risk of kids who will grow up to be failures will be hugely diminished.

Tim Hogan said at October 9, 2013 7:25 AM:


Somebody said that "Capitalism is infinite expansion in a finite environment". The forces of expansion will always win over the forces of contraction as long as there is hope of nearly free energy from nuclear fusion. Things are definitely looking up now. The big question is how the forces for contraction will kill that hope?

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